Back
BlogsPUTS

CALLSFACTORS INFLUENCING OPTION PREMIUM/BASIC OPTION PRICING INGREDIENTS

Darren Krett

Friday 10 February 2023

Share on:

FACTORS INFLUENCING OPTION PREMIUM/BASIC OPTION PRICING INGREDIENTS facebookFACTORS INFLUENCING OPTION PREMIUM/BASIC OPTION PRICING INGREDIENTS twitterFACTORS INFLUENCING OPTION PREMIUM/BASIC OPTION PRICING INGREDIENTS linkedin

Post views: 7094

PUTS

Categories

General

Definition: A put option is a contract between a buyer and a seller whereby the buyer acquires the right, but not the obligation, to sell a specified underlying instrument at a fixed price on or before a fixed date, should the buyer of the put wish to exercise the option. The seller of the put assumes the obligation of taking delivery of the instrument should the buyer wish to exercise the option.

A put option gives you the right to sell the underlying asset at a specific price on or before a specific date. It effectively guarantees a minimum price at which you can sell a particular future.

When the option is exercised, the holder receives a short underlying position at the option's strike price.

A put is effectively a short forward position with insurance.

The value of puts normally rise when underlying prices go down.

Should the price of the future increase to above the strike price of your put, you would not exercise it and your contract would expire worthless. (You would not want to sell the future at a price lower than where it is currently trading.)

LONG PUT

No attachments

CALLSFACTORS INFLUENCING OPTION PREMIUM/BASIC OPTION PRICING INGREDIENTS

Related reads

Lessons
Premium
Elements of an Option Price-image

Darren Krett

Tuesday 31 January 2023

Elements of an Option Price

ELEMENTS OF AN OPTION PRICE An option price is composed of several elements: Intrinsic value: the amount by which an option is in-the-money,
Elements of an Option Price

0


Comments (0)

General
CALLS-image

Darren Krett

Friday 10 February 2023

CALLS

Definition : A call option is a contract between a buyer and a seller whereby the instrument at a fixed price on or before a fixed date, sho
CALLS

0


Comments (0)

Get started with Leviathan FM today

7 day free trialContact us
See our pricing

© 2015 - 2024 Leviathan Financial Management LLC. All Rights Reserved.

Legal Disclaimer: The information provided in the Leviathan website is for informational purposes only. It should not be considered legal or financial advice. You should consult with a financial advisor professional to determine what may be best for your individual needs. Leviathan Financial Management does not make any guarantee or other promise as to any results that may be obtained from using our content. No one should make any investment decision without first consulting his or her own financial advisor and conducting his or her own research and due diligence. To the maximum extent permitted by law, Leviathan Financial Management disclaims any and all liability in the event any information, commentary, analysis, opinions, advice and/or recommendations prove to be inaccurate, incomplete or unreliable, or result in any investment or other losses. Content contained on or made available through the website is not intended to and does not constitute legal advice or investment advice. Your use of the information on the website or materials linked from the Web is at your own risk.